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tv   Mad Money  NBC  June 5, 2012 3:00am-4:00am EDT

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that's okay. we're going to do this again obviously on thursday at metropolitan for the tasting table. and the proceeds are going to share our strength, which is very important. >> have a great day, everybody. bye-bye. i'm jim cramer. welcome to my world. >> you need to get in the game! >> they're nuts! they know nothing! >> i always like to say it's a bull market somewhere. >> "mad money." you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. just trying to save you a little money. my job is not just to entertain. i'm trying to teach here. tonight, time to go worse case scenario. i want to get it out there, because too many people running scared just reacting to the news. they got no game plan. that's producing days like this one where the market got hit for most of the day, before the so-called cooler heads prevailed, and it rebounded into the close. dow ultimately sinking 17 points, s & p inched up .01%, nasdaq rallied 4.6%.
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short sellers feared europe may do something right over night and feared losing all the juicy profits gain in the last eight weeks. remember, they like to take profits, too. people are always looking for analogs, analogies, patterns, touchstones that help us figure out where we can go, how low, how bad. look, it's the right thing to do. we only have our history. if we ignore it we're obviously doomed the repeat it. before i lay out how bad things could get which is the so-called worst case scenario, everything i'm about to tell you can be averted, averted by concrete signs that the europeans are going to address their problems and the chinese are going to cut rates. we won't go worse case if -- at the germans begin to compromise with the have-nots or bank deposit insurance and saving euros and at the same time issuing euro bonds that can buy sovereign debt. that plan has been shot down so many times by chancellor merkel that it seems it's become a pipe dream. listen, we're at crunch time. the bank runs are too furious, the collapse too imminent to
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close our eyes to what the worse case may be. as much as i don't even like to trace it out, frankly. let's deal with the two worst cases the bears out there tell me ring true. seem to be in the realm of possibility. we're going to go put on our bear hats. this is what we come up with. the first worst case is the ugliness that was 2011. not that long ago. the dow is about 1300 points lower than we are now, little more than 10%. how about the s & p. 2011 scenario down to 1,099 in october, 1,119 in august. again, we're at 1247. we would have to go down more than 10% to take out those lows. as horrible as that scenario may be, the book's downright rosy versus the most frequently cited great case, the nadir of the great recession, march 9, 2009. the dow fell to 6900. s & p dropped to 676, a 50% decline. wow.
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that is a worst case. what we have to do is figure out how much better or worse we are right now versus the last time we got to those levels. that's how we decide what the worst case can be. first, we have to ask, is it even possible to repeat either history? the answer is unequivocally yes for the first worst case. it's a resounding yes, actually, given that so many things are indeed going wrong now. but the doomsday 2009 scenario before i even outline it, i'm taking it right off the table. i went to law school because i wanted to be a prosecutor so i'm prosecuting the two worst cases then i will follow up with mitigating factors, the defense that can keep the worst cases from occurring. let's start with what happened last year. why couldn't we repeat 2011? hey, come on, there's more wrong now. things are worse now. they're worse than when we hit those lows 10% ago. europe's in much worse shape than it was back in the summer and early fall of 2001. china has cooled since last summer. maybe not considerably but
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cooled. india and brazil have been robust. they're decelerating. rather fast. in a year where the charts do matter last week we fell below the 200 day moving average. many believe that caused the huge selling vacuum last august. our own gridlock is back, no changes except positions have hardened. closer to a fiscal cliff where government stimulus dies and taxes go higher. we could even have another debt ceiling debacle and another debt downgrade. oh, boy, they're negatives. last and most important, our employment number. while we're still trending above last year we're falling for certain. with the new trend line of the last few months we will be worse than last year. so 10% decline taking us back to lows of 2011, frankly, it is definitively on the table. now, some mitigating factors. first, there's the only game in town this year. last year rates were still high enough to offer alternative stocks. not anymore. the ten year yielding 1.5%, you're getting a much better deal from dividend paying stocks, especially after the favorable tax cuts. even if you strip them away
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you're doing better. the dow yields 2.77%. hey, almost twice treasuries. not too shabby. second, our housing market stabilized while it was in freefall a year ago. the auto market is stable, 11 million going to 14 million. that's huge. that's the driver of the economy. profits are very strong. companies have developed rock-hard balance sheets because they used the fed's mandated low rates to refinance just like citizens have refinanced their balance sheets. finally, commodities are coming down and coming down fast which is a giant win for the consumer. could give us a true tailwind for domestic stocks and allows the chinese to cut like mad because that's what they were worried about. i think it's a push that we can go down to last year's lows and nothing better. that's why 50/50 chance we do it which is why i have stated this def-con two for fear the europeans mess everything up. too much going wrong now. we're just in worse shape than we were in 2011. the scenario cannot be ignored because it's a possibility. it may even be a probability.
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the rap on 2009 is we have not just one large bank failure in europe but the whole countries have failed. logic says we could experience a great recession two except this time it would imported from a declining europe. evidence for the prosecution? we have to believe a collapse of italy and spain could be catastrophic for the whole world. undeniable. second, the fed does seem to be out of ammo. more on this later. we already have incredibly low rates. the only safe place may be in treasuries. that's frightening. easy ain't cutting it anymore. if china keeps slowing while india and brazil continue to break down, we'll be the only growth engine left and our growth is sputtering. there's no safe place to turn this until like 2009. emerging markets being the same reason the ship righted itself. how about mitigation to that? what makes a repeat less likely? credit is much easier now than it was then. you can get loans. europe could shut down some credit worldwide but our banks
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are so much stronger than they were, much stronger than we had any idea back the way it was. we could have a collapse like 2008 where the economy just stopped and you know what, i still think you get credit flowing and it would pick right back up. second, we're creating so many more jobs. we have far fewer homes for sale and mortgage rates are low. it doesn't make sense to stay on the sidelines. there's too much opportunity to buy pretty much anything with low rates, hence, why real estate investment trusts are so strong. finally, the yield factor. i have to keep emphasizing this. while almost 200 companies cut dividends in the great recession, the dividends are coming back. we've had 27 to 30 dow stocks raise their dividends since the bottom, balance sheets are amazing. forget dow 6500. if the dow even fell to 8,000, it would yield 4.2%. that's crazy. given how strong these companies are i doubt we would see big dividend cuts around this time so 4.2% is a realistic figure. put it all together, we are certainly worse off than last august or october so it does seem that should happen again.
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but we're nowhere near as sick as 2009. the worst case, i think it could be below the levels where we bottomed last year which would imply a more than 10% decline but nowhere near the almost 50% decline of 2008-2009. the bottom line, if we don't get a resolution in europe and instead get the collapse of italy and spain, the worst case is on and it is reasonable to believe we can take out last year's lows and perhaps go a few percentage points lower. but it's not realistic to expect a return to 2009's lows. there's too much that's better, including our banks, our balance sheets and most of all, our dividends which will keep us from getting anywhere near these depths. worst case scenario, a little worse than 2011. rob in florida, rob. >> caller: boo-ya, jimmy cramer. because of you, i get to deep sea fish a lot. it's expensive so thanks for what you do for us. >> hey, man, look, i was out catching fluke this weekend. i got an 18 1/2 and 19 incher. we had to throw them back.
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the limit's 19 1/2. i think that's wrong. that would have been good for dinner. >> caller: beautiful. >> honor system. go ahead. that's more of an angler show. go ahead. >> caller: i'm curious about pro sharesltra short, low. euo. you know -- >> yeah. i know. >> caller: portugal, the last two days, it's actually gone the other way so is this a good time to get back into euo? >> i don't like these instruments, including the euo. i think they could get you all down the wrong way. if anything good happens you're going to lose a fortune. even if nothing happens, you may not make any money. i say ixnay on that. avoid those countries. that's good enough for me. worst case scenario, you see no resolution in europe and spain and italy collapse, what happens? we will take out last year's low. i'm going to tell you that that is for certain. will we go back to 2009 march? no. balance sheets, banks, they're all in better shape. we're in worse shape than 2011 but a lot better shape than in 2009.
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"mad money" be right back. >> coming up, the best medicine? as investor concerns over europe continue, cramer is helping you vaccinate your portfolio against potential losses. and there's no better way to do it than companies fighting the battle against cancer. tonight, jim speaks to a pair of ceos on the front lines to see if their innovative treatments could set them apart from the pack. and later, losing interest? is the focus on the fed giving you interest rate overload? jim's breaking down the figures ahead of bernanke's testimony on thursday to give you a clearer picture of what it all means. and where the fed could head from here. all coming up on "mad money." >> get your mad money text alert today. text mm to 26221 to get cramer right on your phone. visit madmoney.cnbc.com or give
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veet wax strips have a hair coating technology that leaves skin smooth for up to 28 days. try getting that with a razor. veet. what beauty feels like. we have product x and we have product y. we are going to start with product x. the only thing i'll let you know is that it is an, affordable product. oh, i like that. let's move on to product y, which is a far more expensive product. whoaaa. i don't care for that at all.
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yuck. you picked x and it was geico car insurance and y was the competitor. is that something you would pay for year after year? i, i like soda a lot but for a change of pace... i don't want to downplay the awfulness of this moment in the stock market although we had a nice rally at the end of the day.
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i need to point out that even though things have gotten tough around here there's still some stocks worth speculating in and for at least doing homework on. sure, you have to be a lot more selective and careful but even this market has winners and i don't want you to miss them because the slow motion financial collapse of europe has made you blind to opportunity. the pervasive sense of fear is creating opportunities left and right but you got to know where to look. right now the american society of clinical oncology is having its annual meeting and this has been a great event for junior drug companies coming up with revolutionary ways to combat cancer. cancer being a big rubric for a lot of diseases. this year the conference is being somewhat ignored even though pharma and biotech stocks are as recession-proof as it gets. whether talking about the recession in europe, the global economic slowdown, this is not about employment number, people. you might not buy a new tv set because the economy's lousy or new car but medicine? cancer killing, something that can combat cancer? that's the kind of purchase you don't defer, not for any reason.
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right now we're getting tons of terrific data from this conference but it seems the market couldn't care less. people are so terrified. take immunogen, imgn. this company is a long time cramer fave company, develops next generation cancer treatments, specifically their technology allows cancer drugs to work like tumor-seeking missiles. you read about this all the time in the paper. it's these guys behind it. missiles that target and kill cancer cells while leaving the rest of the body mostly unharmed. that is a huge improvement for chemotherapy. chemotherapy is just like carpet bombing the whole body. this does not do that. this does not just hurt all cells. it hurts just the cancer cells. it's licensed this technology to five of the top ten oncology companies and just this morning we got positive data on not one, but two drugs they're working on. first, bullish data on tdm-1, apologize for the gibberish, a breast cancer drug that is expected to hit the market next year. second, we got positive phase
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one results from a non-hodgkin's lymphoma drug. this was a great day for immunogen. stock closed up 2.9%. stock has given you a 79% gain since i first got behind it in november 2009, up 29% since we last heard from the ceo on september 26th. the story is too good to be ignored. don't take it from me. let's talk to daniel junius, who has been incredibly straightforward since we started this show, the president and ceo of immunogen. let's learn about the latest data and where this company is headed. welcome back to mad money. >> caller: thanks, jim. nice to be here. last time you were on, you said we could see breakthrough results for tdm-1. this is -- i'm quoting from some research came out today, the largest benefit ever demonstrated in metastatic breast cancer. this is huge news. i know the times picked it up. walk us through what you revealed today.
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>> well, actually, it's a study sponsored by roche so roche is running the study. they revealed the data at this conference. what it said was you're able to provide a more -- a greater benefit to the patients and the most significant benefit element that they showed was after two years on study, patients showed about a 17 per 100 patient survival benefit, so that means for every 100 patients in this study, after two years, 17 more were alive who had been on tdm-1 than on the control arm. i think that's a staggering statistic. at the same time, it showed very good efficacy benefits. about a third less serious adverse events that patients experienced and it was even the nature of those events were more manageable by oncologists. so the comments that have come out from people at the study is you're actually telling us you have a drug that works better and is more tolerable to patients.
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how often does that happen in this business. >> i have a friend of mine in this study. it's rather remarkable. she is much better than anyone thought she would be. now, that may be an aberration, don't want to give people false hopes, but one thing is very clear. she was asking me why is everyone not taking this right now, why doesn't the fda say from now on, this is the course of treatment, because it's that much better. >> well, you have to go through a process and the fda wants to ensure that we have a safe compound that they're making available to patients. they want to be able to inform oncologists of the profile of the drug so they know how to use it. but again, the enthusiasm you hear from oncologists is they want to be able to adopt this quickly for the defined patient population because they know it's going to be a better patient experience, both again in terms of success of treating the disease as well as the patients not dealing with all of the adverse effects. your question about why aren't they using it now, it's not approved now, but the data from
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this study will allow roche to file, they have indicated they will be filing for marketing approval in the u.s. and in europe this year, and in the u.s., they'll be looking for priority review, which means that within six months of submission, assuming the fda accepts it for priority review, they'll make a ruling in terms of whether it will be available to be marketed or not. >> i want to speak to the other drug, this non-hodgkin's lymphoma but that's much earlier stage, right? >> well, the data's earlier stage. it's not a registration study. the data was actually from phase one studies that were conducted by sanofi, and what sanofi was doing through the phase 1 studies is calibrate how they dose patients so maintain the efficacy they saw in the phase 1 study without generating a certain type of toxicity. they were very successful by modulating how they administer the drug and able to maintain that efficacy without having a particular tolerability issue.
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they now have it in three different phase two studies so that's the next step on the way to registration, looking at patients with two different subtypes of non-hodgkin's lymphoma. two of the studies are looking at the compound on its own, another in combination with the standard of care for non-hodgkin's lymphoma. they may be ready to put this into a registration study as early as next year. >> that's better than i thought. my friend adam writes for the street.com was pointing out to me, i'm just going to quote what he says so not to be biased, he goes unfortunately, immunogen hasn't invented a way-back machine to allow the company to renegotiate its mid-single digit royalty on tdm-1 sales. they bake in multi million dollar tdm-1 sales. the smith single digit royalty does cap how much you can make on this, doesn't it? >> well, it does, but look, we entered into agreement with roche in 2000 when the technology wasn't validated.
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it was a big gamble on genentech's side to put the money into developing it and quite frankly, who knew we were going to have the level have success that was here. even with that structure, jim, this has the potential to be a significant economic benefit to immunogen and beyond that, what you get from the data that's been generated by tdm-1 and what we're seeing with the roche compound as well as our own is this is raising the visibility of the technology that we've developed. we have ten compounds in the clinic using this technology, three of them our own. so while, you know, given the results, it would be nice to be getting a richer revenue stream from genentech, it's a legacy economic deal. the potential is very strong for us to be yielding great results both from our own compounds economically as well as those from more recent deals such as those we did with lily and novartis. >> you have been very straight the whole way with us. it is a big story. i thank you so much for sharing your information on our show tonight.
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thank you. >> thank you. appreciate it. >> dan junius has said some things that i actually question about whether they could be true. you just heard how big this drug can be. yes, it's a smaller royalty stream than we would like but the company's here, it made it. most can't get to this state. i think this stock goes higher. stay with cramer. >> coming up, losing interest? is the focus on the fed giving you interest rate overload? jim's breaking down the figures ahead of bernanke's testimony on thursday to give you a clearer picture of what it all means. and where the fed could head from here. and later, the business of hope. treatments are being developed to transform the lives of cancer patients. could its innovative technology have the potential to put this disease on defense? cramer's speaking to the ceo to find out. all coming up on "mad money."
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we need still lower interest rates, right? i know that so many people want the fed to start its bond buying program again, meant to bring interest rates down to levels that will bring borrowers from the sidelines. these pundits think quantitative easing will get us out of this
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mess. to me, that's the height of silliness. first of all, the market's already taken rates lower than the fed ever could thanks to unprecedented worldwide flight to safety. you got ten year treasuries leading 1.5% and you know what, i think we ought to follow the course of germany. if they're any guide, that ten year's going to 1%, especially since think about it, if you're a wealthy european, why not earn ten year dollar protection. if the euro goes kerflooey, as much as our economy could take a hit, owning u.s. treasuries is still a heck of a lot better than owning german bonds that are denominated in euros. second, the fact is our rates are already low enough to tempt just about anyone to borrow, aren't they? so many projects are economic now thanks to low borrowing costs that you got to believe hey, listen, the fed's job is done. remember, the fed's stated goal was to have assets go from weak hands to strong ones,
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particularly housing assets and that's been accomplished. we look at those zip codes and the great spec markets that were florida, east, west coast, the hardest hit markets, prices are -- only vegas, the last to be built, is facing recovery. if you have money for a down payment and can afford to do real estate investing, now is the time. with these low rates, you can rent out the property and clear a huge amount of cash each month, much better than you're going to get from any bond. because your interest rate borrowing costs are so low. sometimes i feel i should turn this show into a real estate program. jim cramer's "mad real property." it's that juicy out there. i spend my weekends looking for this kind of property because i can get a return but remember, i can't own stocks. third, the banks make for real lousy investments here. why? because they need to have somewhat's known as inflection in the yield curve to make real money. in other words, the banks want to be able to lend out at higher rates, that's absurd given that all loans are priced off the bizarrely low and flat yielding
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treasuries. the banks simply can't invest your deposits in good risk-free levels, either. in the '90s when we had the same -- after the savings and loan crisis, banks were able to reliquefy because the fed gave you a great differential between the cash rates and short-term treasuries, like 100 base points. they doubled their money on this stuff. we don't have that now. there's almost no difference between any of the short term rates. if anything, not only should the fed not be buying, but the treasury should be selling bonds. if the treasury department somehow took advantage of these low rates to refinance short term money, refinance short term money with long term capital, it can eliminate any potential liquidity crunch we might have, in the not so distant future something we all know might happen if the government has to borrow at high short term rates once the bond vigilantes set their sights on the u.s. our rates are too low for these vigilantes not to come here and try to wreck our bonds. given the shaky state of our finances, it won't be that hard. while i haven't really agreed much with larry summers, matter of fact, i'm not sure i agreed on anything he's done lately, his op-ed in today's "financial
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times" says the same exact thing i did. it's very wise and poignant except of course he wants to blow the money on projects. i want to use it to refinance the treasury as a bulwark against the liquidity crisis. we can raise $500 billion in 30 year treasuries even if that caused the 30 year rate to spike, it would still be a huge bargain for the treasury and therefore for you and me. finally, the fed's bond buying has worked. it can't stimulate any more activity than it already has. yeah. think about it. the fed's been -- the fed's program has been terrific at stimulating residential real estate buying but it hasn't ignited commercial construction borrowing. i think it's because businesses are suffering from lack of confidence, stems directly from our own paralysis and worries about tax changes not to mention european contagion which is scaring everyone, everyone. but those aren't things the fed controls. come on. in fact, let me go a step further. the only reason we're even talking about the fed is something to talk about. unless ben bernanke can devise a program that makes the banks want to give away money for commercial projects, highly
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unlikely, there's nothing more the fed can do that the market itself couldn't take care of. we can only rely on foreigners to do so much. they want the flight to quality so they buy treasurers. they want the stability of the u.s. real estate market so they buy real estate with cash. they don't build anything. that's not what they do. in the end they're simply hiding money in the u.s. since we have a stable political system. do not for one moment believe they have stability overseas. particularly in brazil and worse, argentina which has gotten back in the habit of appropriating private property. sure, pay attention to what ben bernanke has to say when he comes to capitol on thursday but don't overrate it because it just doesn't matter. it doesn't matter. recognize that bond buyers have done his bidding and then some and now it's up to congress to come up with something that restores confidence or the europeans to get their act together or the chinese to get their economy back on track, all of them more important than ben bernanke. we know commodity markets are calm down to the strong dollar. we know there's plenty of car building and home building and we can do, let me just say, what's made, we will sell. we can do that. that in part has been
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orchestrated by the fed but it doesn't need the fed anymore. we know the money printed by the fed has been flooded into the market. that money isn't doing anything to help companies raise fresh capital to expand and some of that is in part because of the dastardly facebook effect which every day people talk about as just being devastating for our stock market. the money by itself can't create new businesses or put together new stimulus package. the first happens when there's more certainty on top of the low rates. the second happens when there's no gridlock in congress. we won't have anything to say about that until november. in short, the fed's already done what it can. the bond market buyers are doing the rest. from what anyone can tell, there's just not much more to be done. the problems we do have simply can't be solved by the fed alone anymore. if the fed were to cause rates to go any lower, all it would do is take purchasing power away from the elderly who rely on fixed income securities for their own income, not to mention making it impossible for the banks to make enough profit to justify lending with any great confidence. yes, now it's time for the fed to watch and hope like the rest of us, just like the rest of us,
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unless ben bernanke feels he has a mandate to come in and get stocks above the 200 day moving average to force short sellers to cover. of course that's not going to happen. it's not what a central bank is supposed to do. it's not in the charter. as crazy as it seems it would be more helpful than anything else the fed could do right now. the bottom line, the fed's no longer the answer. at this point, they've pretty much done everything before the shouting on thursday's testimony before congress. the government should be a seller of debt, not a buyer. sadly, that's all that can be done by the federal reserve. it is at last out of bullets. the ones it is firing aren't as powerful as market forces which are sending rates far lower than bernanke ever dreamed of. at this point, even want. bill in arizona, please. bill. >> caller: hey, boo-yah from beautiful phoenix, arizona. >> you got the edge on me, partner. what's up? >> caller: i have a question about a stock i was hoping to fill in my portfolio. texas capital bank shares, inc. so far it's really held up well during the correction,
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especially for a financial. if tcbi isn't a buy what small cap should i look at instead? >> well, look, you've had great success with tcbi and i got to tell you, this is a bank in a growth area and that does matter. that said, i don't like the domestic bank stocks. i did like them for the longest time, i said don't buy the internationals, own the domestics. right now we got to wait for employment growth. we got to get a better yield curve. i would be a seller of that bank, too. i know people are looking for an answer from the fed. but the fed is not it. the government shouldn't be a buyer of bonds anymore. it should be a seller. isn't that obvious? isn't that obvious to everyone except for the federal government? stay with cramer. >> coming up, ride the lightning. take a nonstop thrill ride as cramer goes stock after stock. all your calls taken rapid fire on the lightning round. and later, the business of hope. treatments are being developed to transform the lives of cancer
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patients. could this innovative technology have the potential to put this disease on defense? cramer's speaking to the ceo to find out. all coming up on mad money. >> on june 15th we're celebrating a fifth annual edition of "mad money." it's a family affair. >> check it out. >> want to join cramer in studio for this special event? >> a brotherly dispute. >> doctor is in the house. head to madmoney.cnbc.com to sign up for free tickets. >> the family that invests together stays together. [ jim koch ] what do fresh flowers, bourbon barrels, chocolate, chilies and something called kosmic mother funk all have in common? sam adams! last year we brewed more than one new beer every week. some we'd been experimenting with for years, others...we just found a cool ingredient. many we brewed just once to see how they would taste.
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here's some business. you know how important family is to me. that's why i'm excited to once again invite families from all over cramerica into our studio for the annual "mad money" it's a family affair show. next friday, june 15th we're due for family therapy here. i hope you'll join us. there's still a few seats left but time is running out so go to the website, madmoney.cnbc.com and click the link near the top of the page to sign up for tickets. that's madmoney.cnbc.com. and now, it is time. it is time for the lightning round. are you ready? start with the lightning round.
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we start with victor in california. victor? >> caller: sisco. >> i think it's dead money. i don't think there's anything you want to buy there. things aren't going so hot. bart in florida. bart. >> caller: hey, jim. cmi, what's the story? >> i think the quarter's going to be not good enough to be able to move the stock. the stock is in a 2011-like freefall. hans in california. >> caller: yes, cramer. three, four years ago you did something on the swiss technology company abb limited. >> yes. >> caller: i bought it then it's europe. it's europe. i will touch nothing in europe. nothing. joe in texas. joe? >> caller: hey, big boo-yah to you, jim, from beautiful san marcus, texas. bhp billington. a few months ago, i was watching the program, you hit the bullish button on that. it's kind of sunk down, i don't know -- >> chinese collapse.
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it's a chinese play and china's collapsed. would i sell it here? oh, man. it's like freeport, like the rest of them. i don't know, bhp is down so much, it yields 3.6. i think 4% is where these stocks are starting to bottom but nothing yet. okay. let's go to steve in california. steve? >> caller: prudential, jim. pru. >> i can't believe how low this stock has fallen. the quarter wasn't that good. there are a lot of other financials that are better. i cannot get behind pru down here. maybe below 40. susan in texas. susan? >> caller: yes. boo-yah, mr. cramer. what's going on with netflix? >> lot of competition coming in. netflix has to spend too much money to get programming. i don't want anything to do with netflix. i think it is starting to slow. that, ladies and gentlemen, is the conclusion of the "lightning round." the lightning round is sponsored by t.d. ameritrade. ♪ oh.
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let's go. from the crack, off the backboard. [ laughs ] dad! [ laughs ] whoo! oh! you're up! oh! oh! so close! now where were we? ok, this one's good for two. score! [ male announcer ] share what you love with who you love. kellogg's frosted flakes. they're gr-r-eat! so every year my family throws this great reunion in austin. but this year, i can only afford one trip and i've always wanted to learn how to surf. austin's great -- just not for surfing. so i checked out hotwire. and by booking with them, i saved enough to swing both trips. see, hotwire checks the competition's rates every day so they can guarantee their low prices. that's how i got a 4-star hotel on the beach in san diego for half price. ♪ h-o-t-w-i-r-e ♪ hotwire.com
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even in this difficult environment, there are still some solid opportunities out there. you just got to know where to look. take the american society of clinical oncology meeting going on right now, an event where a number of drug companies have presented incredible data about ground-breaking cancer treatments but nobody's really paying attention because we're all too worried about the collapse of europe and weaker unemployment here even though that's what makes these stocks worth more than they used to be. companies like ariad pharma, a small cap speculative biotech firm that just this morning presented some very positive clinical trial data on you have to excuse me on these pronunciations, on a new leukemia drug which the company expects to submit for fda approval in the third quarter.
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we're almost there. this drug is designed to work on leukemia patients whose disease has proven resistant to the current crop of treatments and something that can do $2.5 billion in sales. the stock has been strong anticipating this huge run. it's up 140% in 2011, another 28% year to date but might not be done. of course, a stock like this is only for speculation because the company's not yet profitable and it isn't expected to have any material revenues until 2014. that's what makes it so you can't lump it in with the j & j or lily. however, it has a healthy pipeline of oncology drugs including a potent treatment for non-small cell lung cancer. this stock is pretty much immune to a slowdown in the global economy or financial panic in europe. these are life-saving drugs that they're working on. let's check in with dr. harvey burger, chairman and ceo of ariad pharmaceutical, find out more about his company and the new data they presented at the conference today. welcome to "mad money." >> thanks, jim. >> all right. thank you for coming on, because this is really a pivotal day. you announce some incredible
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statistics, 54% response rate for this horrible leukemia, one part of leukemia. i need you to walk me through it and our viewers because i am not sophisticated enough to be able to interpret the data myself for our show. >> sure. thanks very much. you know, the story's actually pretty simple. what we presented earlier today was really compelling clinical data on this drug in patients with a type of leukemia, chronic myeloid leukemia. there are drugs available for this but most eventually fail them and this was designed to treat first the resistant intolerant forms of the disease, namely patients who have failed, and ultimately will be moving it forward based on future clinical trials to patients who are newly diagnosed with cml. the results presented earlier today really were striking because well over half of the patients who had failed every
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single other drug and had a very difficult time with their disease, had developed really an inability to live longer with the drug, have now a new treatment that makes a big difference in their lives, and really important responses in patients with cml. >> now, harvey, what we discovered is that a lot of companies that have come up with something like you have, it's not just that one use that you're trying it for, because it's so spectacular. is this just limited to a particular kind of leukemia or can this drug be hopefully tried on other different conditions? >> the way the drug was designed, it has important activity in cml. it also has very important activity and we showed it in the trials earlier today in a form of acute leukemia, but as well, we expect future trials to look at other types of acute myeloid leukemia, various solid tumors like breast cancer and other forms of solid tumors.
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so it's not just cml. the estimates of potentially well over $2.5 billion in peak sales really is entirely based upon cml. doesn't take into account any of the other indications which obviously are part of what we're exploring now. >> all right. explain how it works. you take a pill each day? >> you take one pill each day. patients probably will receive the drug for many, many years, but a pill a day, relatively easy, well tolerated based on the data we have so far, and very easy for patients to live with the drug and thus live with their disease over many, many years long term. >> okay. now, you unlike a lot of other companies i deal with are choosing what seems to be go it alone on this. you've got a new discovery, got a development, got to commercialize it. why go it alone? it costs a fortune to get something ultimately through the fda. >> well, yes, it costs a lot of money but really, to create value for our shareholders and
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create a sustainable business, the model we have will work. discovery of drugs, develop them and then commercialize them in multiple global markets. it's been done before with companies. we can do that and it's going to create way more value long term for our shareholders and create a real business. now, the reason i think we can really do this is because we not only know how to develop drugs but have now discovered four cancer drugs that have gone into clinical trials that are doing well, two that we're leading, two that the partners are leading. it's a whole portfolio of innovative oncology drugs and that is what will drive the long-term value for our shareholders and building the company's intrinsic value. >> you do have a deal with merck about something about to come up. again, i apologize for the mispronunciations here. that is not necessarily expected to be able to pass muster right now, right?
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>> well, it's still an open issue. it's under review by the fda and in europe as well in patients with sarcomas, soft tissue and bone cancers. merck has plans as well to start clinical trials in patients with lung cancer and patients with breast cancer, and potentially other solid tumors. all registrational trials on top of the work that they've done, and we've done with them over the years in sarcomas. we're waiting for responses from the fda and next steps with respect to sarcomas, but merck's committed to moving forward and other indications and really create some value around this as an important new drug available to patients with solid tumors. >> harvey, one last question. how do we follow the progress of your company and what are the next milestones we need to see for your leukemia drug? because your company's been an amazing performer but i want to -- i really want to get, sink
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my teeth in it because it sounds like you've got so much going and you're going it alone, that you're going to have a major pharma company if this good luck continues. >> well, i hope so. we're all committed to building a fully integrated oncology business with a global focus, and so what are the next major events. we'll be presenting the first clinical data on our lung cancer drug at the end of september at a major european oncology meeting. we'll be filing with the fda and ema in europe for regulatory approval of penatonib in the third quarter, not far from now. we'll be starting the key randomized trial for newly diagnosed cml patients in the third quarter, and you know, we are really committed to building a company. i've invested heavily in ariad over the years. i have never sold a single share of ariad stock in 20 years. i really believe the best is yet to come. and it's very, very close, as we make that final transition to a fully integrated oncology business.
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>> you make a very compelling case for the situation. thank you so much for sharing the data first on our show, because it's very big news. appreciate your coming on. >> thanks very much, jim. it was a pleasure. >> that's harvey burger, chairman and ceo of ariad pharmaceuticals. to me it sounds like a junior selgene. you got to do your work. i do not even pretend to know exactly how all these drugs work. you know what i do, the website does have a lot of information. i think this company could be a very long term winner but it is speculative. aria. stay with cramer. ross america, i found new ways to tell people about saving money. this is bobby. say hello bobby. hello bobby. do you know you could save hundreds on car insurance over the phone, online or at your local geico office? tell us bobby, what would you do with all those savings? hire a better ventriloquist. your lips are moving.
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investing like a contrarian ant always clever. sometimes it doesn't count as investing. last time i hosted a special, covered it all, spanish bond yields, slowdown in employment, bear market in japan, to prevent europe from cascading further. no sooner did we finish the broadcast than i read a bunch of wise guys who said whenever there's a special calling out all the woes that's the bottom and you got to jump in and start buying with both feet. first, if only we were that stupid in the media. i'm not saying the media gets it right all the time but think about it. our latest employment number came up 90,000 jobs short. there are major runs on spanish banks. china is decelerating at an alarming rate. all that comes under the category of news. last i looked, when there's news, and you are the business network of record, you better cover it. more important is the cycle of the crisis itself. we're not reacting to prices that are in free-fall. the s & p 500 isn't even down for the year, it's up. so is the nasdaq. the kind of assumption that says you got to take the other side from the media only has gravitas when it is down so much it looks
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up to some in the audience. are we really late to the bear party when we're doing a special with those year-to-date gains? at these levels, betting against the media isn't being contrarian, it's just glib. the real issue is how to protect yourself from the worse case scenario if nothing gets done. the most discouraging thing if you're a bull is that nothing happened last night. think about it. what didn't happen? compromise between spanish and german leaders? chancellor merkel spot on the idea of euro bonds to bail out spain while spain was willing to agree to a level of financial control by the european union. not helpful. what else didn't happen? the chinese. bailout engine of 2009, watch still more weak data come out and didn't cut rates. amazing given the way the commodities collapsed here. we didn't give a coordinated response from ben bernanke or tim geithner providing financial backstops to anything big the euros might want to do to alleviate the situation. the biggest news is that there was no news which brings us to
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the heart of the charge that the media is late in merely marking the bottom. without any news, nothing has changed since friday. why bet against the news media outlet smart enough to recognize when something that needs to happen, didn't happen and the consequences of that not happening? that's called windshield reporting. end commentary. not rear view mirror. buckle your seat belts. it's murky ahead and the charts we follow say it could be downhill from here without some concrete and positive information from europe. right now, it's not clear at all that we're going to get it. we love theme parks but with four kids, it can just be too expensive. yeah, so to save money we just made our own. oh no! what could be worse than ninety-foot swells?! typhoon! first prize! it's a cheese grater. wooooo... this isn't scary. are you kidding me? look at that picture of your mom's hair from the '80s.
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there's an easier way to save. wooohooo... geico. fifteen minutes could save you fifteen percent or more on car insurance. it has a very nice spice note. [ jim koch ] it has a little lemon zest and a historic brewing spice called grains of paradise. -it's citrusy. -lemony. sam adams summer ale, it totally reminds you of summer, you know?
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we're staying in rhythm here. every time the market gets hit and hit really badly we suddenly think the europeans are going to wake up and do something good. i say you sell the rip up, okay? so you can reposition and buy the good dividend yielders on the way down. only dividends that are safe, that are non-economic because

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